Public sector banks take action against wilful defaulters

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State_Bank_of_India
State Bank of India, largest PSU lender

August 27, 2017

Public sector banks in the country have taken action against 5,954 wilful defaulters who owe around Rs.70,000 crore. The banks took loan recovery action under The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Till March 31, 2017, 21 public sector union (PSU) banks have taken action against the wilful defaulters, as reported by the Economic Times. The State Bank of India, the largest lender in the country, has taken action against 1,444 defaulters who owe the bank around Rs.21,000 crore. The other 20 PSU banks took action against 4,510 wilful defaulters who owe a total of Rs.48,496 crore.

By the end of FY17, the total outstanding loans by wilful defaulters amounted to Rs.92,376 crore, an increase of 20.4% from Rs.76,685 crore in FY16. The total number of wilful defaulters also increased by 10% on a year-on-year basis. At the end of FY17, the number was 8,915, whereas it was 8,167 at the end of the last fiscal year.

In FY17, the PSU banks wrote off bad loans worth Rs 81,683 crore with an increase of 41% from FY16, the highest amount in the last five fiscal years. The gross non-performing assets (NPAs) of the PSU banks increased to Rs.6.41 lakh crore at the end of FY17, against Rs. 5.02 lakh crore in FY16.

The Reserve Bank of India has taken many steps to tackle the problem of NPAs. It has implemented various measures to ensure that PSU banks take recovery action against wilful defaulters. Earlier, it barred the Bank of India from paying dividends due to high percentage of net NPAs (over 6%).

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